As the SF-based National Editor at Forbes, I write a lot about tech, but am interested in a lots of different people and markets. I've done covers on Google, HP, Wireless, Africa, Philanthropy, Yahoo, and the Canadian dope industry. I was at The Wall Street Journal, covering tech in the Silicon Valley, and before that wrote about Japanese banks, financial markets, and the energy business from Tokyo. I have been a traveling salesman, a street peddler, a ghost writer, and a bellboy at a hotel in Alaska. I've got degrees from Kenyon and the University of London, and held a Knight-Bagehot fellowship at Columbia. I lecture at U.C. Berkeley's iSchool, appear Saturdays on Fox News' "Forbes on Fox," and manage to keep my wife and two teenage sons reasonably entertained.

Groupon IPO Message To Google And Us

Every generation gets the IPO letter it deserves. Groupon just filed theirs here. (For the basics of the offering and a rundown of the winners and losers, click here.)

IPOs are, they say in the Valley, branding events. So it’s worth parsing the message. During the Internet bubble, the company that produced Wired Magazine described itself as a publication “with attitude” – not your usual S1 language, and perhaps a small part of the reason why the launch failed. The estimable publication is now owned by Conde Nast. Google went public in 2004, after the crash, with a warning that it might not always explain in its investment choices. It was cheeky, but also reasonable for a company working a new industry.

So what can we read from the Groupon IPO cover letter, penned by chief executive Andrew Mason (a guy we put on our cover last summer)? It’s hugely ironic – like much of the current zeitgeist – and strangely ambivalent about capitalism, considering it’s aiming for the ultimate in capital markets. It also says important things about how it sees its own market, the coming battle with Google, which reportedly tried to buy Groupon for $6 billion, and what Groupon needs this money for.

Here is a digest of the key quotes from Mason’s letter, with a couple of editorial remarks in brackets:

-“Before Groupon, there was The Point—a website launched in November 2007 after my former employer and one of my co-founders, Eric Lefkofsky, asked me to leave graduate school so we could start a business.” [Translation – zero to billions in no time flat – what a world! Also, we are not old-line retailers.]

-“I started The Point to empower the little guy and solve the world’s unsolvable problems. A year later, I started Groupon to get Eric to stop bugging me to find a business model.” [Again, I am not a businessman. In fact, I’m not sure I like businessmen. But then, neither do our customers, so that "anti-business" thing is profitable.]

-“we intend to continue operating according to the long-term focused principles that have gotten us to this point. These include:

“We aggressively invest in growth.

“We can measure the return and believe in the long-term value of the marketplace we’re creating.” [This is, however, is also a traditional IPO – we actually need the capital. It isn’t just about cashing in.]

“We are always reinventing ourselves.

“Expect us to make ambitious bets on our future that distract us from our current business. Some bets we’ll get right, and others we’ll get wrong, but we think it’s the only way to continuously build disruptive products.” [Just like Google warned you about the Internet 2004, we don’t want you thinking the whole social Web is figured out, or that we are standing still.]

“We are unusual and we like it that way.

“…we seek to create experiences for our customers that make today different enough from yesterday to justify getting out of bed. While weighted toward the measurable, our decision-making process also considers what we feel in our gut to be great for our customers and merchants, even if it can’t be quantified over a short time horizon.” [Don’t believe people who tell you a coupon service can be commoditized. Google may believe in algorithms, but we believe you can’t encode taste.]

“Our customers and merchants are all we care about.

“After selling out on our original mission of saving the world to start hawking coupons [Is anyone else tired of irony?], in order to live with ourselves, we vowed to make Groupon a service that people love using… nothing would be as crucial to our long-term success as happy customers and merchants…[stuff here on using lots of people, not algorithms – got that, Google Offers?]…As such, we do not intend to be reactive to competitors. We will watch them, but we won’t distract ourselves with decisions that aren’t designed primarily to make our customers and merchants happy. [This will always be a relatively high-cap business.]

“We don’t measure ourselves in conventional ways.

“There are three main financial metrics that we track closely…gross profit, which we believe is the best proxy for the value we’re creating…free cash flow—there is no better metric for long-term financial stability….[and our own]…Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.”

[OMG! OMG! DANGER WILL ROBINSON! WARNING! WARNING!]

This last bit scares me. Looks like the revival of EBITDA, or earnings before Interest, Taxes, Depreciation and Amortization. This was an accounting concept that gained popularity during the build out of cable networks and wireless systems, and can be informally translated as “all the wonderful money we had if we didn’t have these pesky costs.” Everyone liked the idea, assuming that eventually the systems would be paid for, and the cash would roll in. The problem was, the costs never went away.

What the heck, it launched a lot of companies and paid for a lot of expansion. Not sure the EBITDA idea worked for many investors, though.

Still, that kind of problem is years away. It only matters if Groupon can’t control its costs any better than it seems to say here that it can. This critical financial document is, after all, a marketing event, as much as reality.

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Most of the coupon mom see coupons in our newspapers but it can be difficult to find coupons for exact product, for instance I always use printable coupons or “Printapons” search online to find your coupons

The next year, it did $440 million of sales, $215 million of EBITDA and $100 million of Net Income. 10 years later – $12 billion of EBITDA, $8 billion of Net Income. 10 years from now I’ll bet you Groupon is trading below it’s IPO price if it’s even still around. http://bit.ly/kB1Zn2

I find it hard to believe that they had revenue of 700+ million and still lost north of 350 million. What a burn rate, I was shocked when a group I was a member of had a burn rate of 475k/mth back in the late 1990′s. I am also still astounded that this coupon company may have an evaluation of 25 billion. Clearly the only word I have left to type is Webvan